PRECISION CONTANEURS LTD , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 13(1)(2), MUMBAI

ITA 5379/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5801 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 18-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Keywords: Bogus purchase
• Section: 143(3); 143(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.5379/MUM/2017 ASSESSMENT YEAR: 2008-09 M/S PRECISION CONTAINUERS LTD. 401, COURT CHAMBER S.V. ROAD, BORIVALI (W) MUMBAI-400 092 PAN: AAACV4766F VS. DCIT-13(1)(2) 3 RD FLOOR, MITTAL TOWER, B WING NARIMAN POINT MUMBAI-400 021 (ASSESSEE) (REVENUE) REVENUE BY : SHRI BHARTI SINGH ASSESSEE BY : SHRI RAHUL HAKANI DATE OF HEARING :10/01/2019 DATE OF PRONOUNCEMENT : 04 .04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER 1. THE ASSESSEEBY WAY OF THIS APPEAL IS CHALLENGING THE ORDER DATED 27/06/2017 OF THE LD. COMMISSIONER OF INCOME- TAX (APPEALS)-21 {HEREINAFTER CALLED CIT(A)}, MUMBAI, I N APPEAL NO.CIT(A)-21/DCIT-13(1)(2)/IT-465/2015-16.THE ASSES SMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER O F INCOME TAX-13(1)(2), MUMBAI [AO] U/S 143(3)R.W.S. 147 OF T HE INCOME TAX ACT,1961 ON 14/03/2016.THE GROUNDS RAISED BY TH E ASSESSEE ARE AS UNDER: 1. THE LD. CIT(A) ERRED IN CONFIRMING ADDITION MADE BY A.O OF RS. 1,92,36,052/- BEING 12.5% OF ALLEGED NON-GENUINE PU RCHASE FROM LAKHAN TRADERS PVT.LTD. OF RS. 15,38,88,418/- WITHO UT APPRECIATING THAT SAID PURCHASES ARE GENUINE, PAYMENTS WERE MADE THRO UGH BANKING CHANNELS, ASSESSEE HAD PRODUCED INVOICES AND DELIVE RY CHALLANS AND 2 ITA N O.5379/MUM/2017 PRECISION CONTAINEURS LTD. ALSO FILED QUANTITATIVE TALLY AND HENCE, THE ADDITI ON OF RS. 1,92,36,052/- OUGHT TO BE DELETED. 2. WITHOUT PREJUDICE TO ABOVE, THE ADDITION SUSTAIN ED BY THE A.O. AND CIT(A) IS ON A VERY HIGHER SIDE AND SAME MAY BE RED UCED. 3. WITHOUT PREJUDICE TO ABOVE, THE A.O. & CIT(A) ER RED IN NOT ADJUSTING THE GP ALREADY DECLARED ON ALLEGED NON-GENUINE PURC HASE AGAINST ESTIMATE OF GP OF 12.5% ON ALLEGED NON-GENUINE PURC HASE. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE VAR IOUS GROUNDS OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITION O F RS. 1,92,36,052/- BY CIT (A) UPHOLDING THE ORDER OF TH E AO IN WHICH ADDITION AT THE RATE OF 12.5% OF THE ALLEGED NON-GE NUINE PURCHASES FROM LAKHANI TRADERS PVT.LTD. OF RS. 15,3 8,88,418/- IS MADE. THE ISSUE RAISED IN THE GROUND NO.2 IS WITHO UT PREJUDICE TO GROUND NO.1 WHEREIN THE ASSESSEE HAS CHALLENGED THE ADDITION AS BEING EXCESSIVE AND HIGHER AND NOT ALLOWING AD JUSTMENT OF GP ALREADY DECLARED ON THE SAID PURCHASES. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENG AGED IN THE MANUFACTURING OF STEEL DRUMS. DURING THE YEAR THE A SSESSE FILED RETURN OF INCOME ON 03/09/2008 DECLARING A LOSS OF RS. 15,77,23,191/- WHICH WAS PROCESSED U/S 143(1) OF TH E ACT . THEREAFTER THE ASSESSMENT OF THE ASSESSEE WAS REOPE NED BY ISSUING NOTICE U/S 148 OF THE ACT ON 31/03/2015 AF TER THE AO RECEIVED INFORMATION DDIT(INV), MUMBAI THAT THE ASS ESSEE IS BENEFICIARY OF BOGUS PURCHASES TO THE TUNE OF RS. 3 ,50,00,000/- MADE FROM LAKHAN TRADERS PVT.LTD. THE AO ISSUED SHO W CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE PURCHASES SHOU LD NOT BE DISALLOWED FOR BEING BOGUS. THE ASSESSEE DURING TH E ASSESSMENT PROCEEDINGS SUBMITTED BEFORE THE AO THAT THE TOTAL PURCHASES MADE FROM THE SAID PARTY WERE RS. 15,38,88,418/- A ND NOT RS. 3 ITA N O.5379/MUM/2017 PRECISION CONTAINEURS LTD. 3,50,00,000/- CRORES. THE ASSESSEE FILED DELIVERY C HALLANS, BILLS ,VOUCHERS , SALE INVOICES CORRESPONDING TO THE SAID PURCHASES SALES LEDGERS REFLECTING THE REALISATION OF PROCEED S, COPIES OF THE BANK STATEMENT REFLECTING THE PAYMENTS AND RECEIPT OF SALE PROCEEDS AND ALSO RECORD REFLECTING THE MOVEMENT O F STOCKS. IT WAS ALSO SUBMITTED DURING THE ASSESSMENT PROCEEDING S THAT ITEM PURCHASED FROM LAKHAN TRADERS PVT.LTD. AS ALLEGED HAWALA PURCHASES WERE SOLD TO AKRUTI METAL & ALLOYS PVT.L TD. AND DELITE TUBES & ALLOYS PVT.LTD.. THE AO WAS NOT CONVINCED W ITH REPLY OF THE ASSESSEE AND APPLIED GP OF 12.5% BY TREATING THE PURCHASES AS BOGUS BY FRAMING ASSESSMENT U/S 143(3) R.W.S 14 7 OF THE ACT VIDE ORDER DATED 14/03/2016. 4. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) UPHE LD THE ORDER OF AO BY FOLLOWING DECISIONS OF VARIOUS COORDINATE BENCHES INCLUDING THE AHMEDABAD BENCH IN THE CASE OF VIJAY PROTEINS LTD VS ACIT (1996) 58 ITD 428 (AHD), CIT VS. BOLANATH P LY FAB P. LTD. (2013) 355 ITR 290(GUJ) AND THUS JUSTIFIED THE ADDI TION AT THE RATE OF 12.5% ON THE GROUND THAT THE AO HAS ONLY AD DED PROFIT EMBEDDED IN THE SAID BOGUS PURCHASES AND NOT ADDED THE ENTIRE BOGUS PURCHASES. 5. AFTER HEARING BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD, WE OBSERVED THAT THE ASSESSEE IS MANUFACTURING STEEL DRUMS. THE UNDISPUTED FACTS A RE THAT THE ASSESSEE HAS MADE BOGUS PURCHASES TO THE TUNE OF R S. 15,38,88,418/- FROM LAKHAN TRADERS PVT.LTD WHICH IS A HAWALA PARTY. THE ASSESSEE HAS FILED DURING THE ASSESSMENT PROCEEDINGS THE PURCHASE BILLS, NAMES AND ADDRESSES TO THE MATE RIALS WERE 4 ITA N O.5379/MUM/2017 PRECISION CONTAINEURS LTD. SOLD, RECEIPT OF SALES PROCEEDS AND PAYMENT PROOF S ETC. THE APPLICABLE VAT TO THE ASSESSEE IS 4%. UNDER THESE CIRCUNSTANCES, THE PRESUMPTION IS THAT THE ASSESSE E MIGHT HAVE TAKEN THE BOGUS BILLS FROM LAKHAN TRADERS PVT.LTD W HEREAS THE ACTUAL PURCHASES MIGHT HAVE BEEN MADE FROM GREY MAR KET AS SALE WAS NOT IN DISPUTE. THE PURPOSE TO APPLY GP ON THE BOGUS PURCHASES IS THAT THE ASSESSEE MIGHT HAVE MADE SOM E SAVINGS BY WAY OF NON PAYMENT OF VAT AND OTHER LEVIES WHICH HAVE TO BE BROUGHT TO TAX. THE ASSESSEE HAS RELIED ON A COUP LE OF DECISIONS WHEREIN THE ADDITIONS WERE DIRECTED TO BE MADE A T 2% OF THE BOGUS PURCHASES. HOWEVER IN THE PRESENT CASE THE VA T RATE IS 4% AND THE ADDITION HAS TO BE MADE AT A RATE MADE UP O F VAT PLUS REASONABLE PROFIT. IN OUR VIEW IT WOULD BE REASONAB LE IF THE GP 5% IS APPLIED TO THE BOGUS PURCHASES. THE AO IS DIRECT ED ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 04.04. 2019 SD/- SD/- (RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED :04.04.2019 * THIRUMALESH, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5 ITA N O.5379/MUM/2017 PRECISION CONTAINEURS LTD. 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER (ASSISTANTREGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI